On July 22, the academic world and the technology world came together to discuss the results of a completely new full-scale experiment. The prestigious National Bureau of Economic Research posted a study detailing the impacts of universal income, in other words an unconditional cash transfer.
Specifically, the researchers gave $1,000 per month for three years to 1,000 low-income people in Illinois and Texas. They also created a control group of 2,000 people who received only $50 per month. The participants had a personalized mobile application that allowed them to study their use of this sum. They had agreed to the transmission of their bank statements, their medical records and even the results of their regular blood tests. The substantial amount of $12,000 per year represented a 40% increase in household income and it was not taxable. This is the first real study of this type because previous experiments, notably in Finland in 2017-2018, involved more modest monetary transfers (560 euros), in substitution for allowances.
More leisure, less work
The study’s findings are clear. The program led to a 2 percentage point decrease in labor force participation among the lucky beneficiaries and a reduction of 1.3 to 1.4 hours per week in working hours, with the participants’ partners reducing their work activity by a similar amount. The time freed up was not compensated by other productive activities but by more time devoted to leisure. No impact was recorded on the quality of employment. Investment in human capital did not increase significantly, for adults or their children.
The only notable finding was that people in their 20s and 30s who received the transfer saw their higher education enrollment increase by 2%. The money generated major benefits for stress and mental health in the first year, but that effect faded by the following year, with food insecurity following the same trajectory. Consumption of alcohol and painkillers increased.
A trendy utopia in tech
This study is a blow to the defenders of universal income, especially among progressives who have made it the standard-bearer of the fight against inequalities. Many comments did not fail to draw a parallel with the large allocations distributed without conditions during the Covid period in the United States, a country until then not accustomed to social shock absorbers, and which had led to strong movements on the labor market, the famous “great resignation”.
Universal income is also very popular among tech entrepreneurs. It should be noted that the project led by Open Research, a research laboratory associated with OpenAI, cost $45 million. Sam Altman financed most of it, driven by the conviction that advances in artificial intelligence and robotics will lead to a wave of job destruction. A conviction that also prompted him to create the Tools for Humanity project, which has set itself the mission of solving the thorny issue of universal income, in other words, of organizing the redistribution of wealth outside the control of nation states, directly to individuals, using the decentralized infrastructure of the blockchain, as we presented in a column some time ago.
The media coverage of the study is interesting. The consensus among academics is that the study’s results are mixed and disappointing. Yet most of the press reports, Forbes Bloomberg, Vox, NPR and Quart, present the results in a positive tone and ignore the negative elements. Other media outlets, which have written a lot about universal income, such as the New York Times where the Washington Post, ignored the story while the latter newspaper covered the publication, the same day, of another much narrower study on universal income which concluded a 27% reduction in hospital emergencies for recipients.
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